Miramar Hotel and Investment : 2020 Final Results Announcement

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MIRAMAR HOTEL AND INVESTMENT COMPANY, LIMITED 美 麗 華 酒 店 企 業 有 限 公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 71)

2020 FINAL RESULTS ANNOUNCEMENT

ANNUAL RESULTS

The Board of Directors of Miramar Hotel and Investment Company, Limited (the ''Company'') announces the consolidated results of the Company and its subsidiaries (collectively, the ''Group'') for the year ended 31 December 2020 together with the comparative figures for the corresponding year in 2019.

Highlights

• . The Group's revenue decreased by 57.1% to HK$1,315 million (2019: HK$3,062 million)

• . Profit attributable to shareholders decreased by 76.6% to HK$302 million (2019: HK$1,288 million)

• . Underlying profit attributable to shareholders* dropped by 42.1% to HK$454 million (2019: HK$784 million)

• . Earnings per share and underlying earnings per share* were HK$0.44 (2019: HK$1.86) and HK$0.66 (2019: HK$1.13) respectively

• . Final dividends per share proposed are HK28 cents (2019: HK34 cents), which makes a total annual dividend of HK50 cents per share (2019: HK58 cents), and are payable in cash

* Underlying profit attributable to shareholders and underlying earnings per share excluded the post-tax effects of the investment properties revaluation movements

CHAIRMAN AND CEO'S STATEMENT

Dear shareholders,

On behalf of the Board of Directors of Miramar Hotel and Investment Company, Ltd. (the ''Company''), I would like to present the report on the financial and operational performances of the Company and its subsidiaries (the ''Group'') for the year ended 31 December 2020 (the ''year'').

Consolidated Results

The Group's revenue for the year amounted to HK$1,315 million (2019: HK$3,062 million), a decrease of 57.1% against last year. Profit attributable to shareholders for the year was HK$302 million (2019: HK$1,288 million) with a year-on-year decrease of 76.6%. The decrease is mainly caused by the revaluation loss on fair value of our investment properties (there was revaluation gain in last year) and the weakened business performances of our hotel & serviced apartments business, food & beverage business and travel business which, in turn, was due to the impact from Coronavirus disease (''COVID-19'') pandemic.

The underlying profit attributable to shareholders* (excluding the net decrease in the fair value of investment properties by HK$152 million (2019: net increase of HK$504 million)) reduced by 42.1% to HK$454 million (2019: HK$784 million). The underlying earnings per share* decreased by 41.6% to HK$0.66 (2019: HK$1.13), which is in line with the decrease in underlying profit attributable to shareholders.

Final Dividend

The Board recommends a final dividend of HK28 cents per share to the shareholders listed on the Register of Members at the close of business on 17 June 2021 (Thursday). The proposed final dividend is expected to be distributed to shareholders on 8 July 2021 (Thursday). Including an interim dividend of HK22 cents per share paid on 13 October 2020, the total dividend payment for the whole year will be HK50 cents per share.

Overview

In 2020, the relapsing COVID-19 pandemic has caused lasting damages to the global economy, cross countries trade activities and all walks of life. There is no doubt that Hong Kong as an international hub could not manage alone. The prolonged cross-border travel restrictions and stringent anti-epidemic measures have triggered to significant deterioration in domestic economic activities across diverse industries. The number of visitors to Hong Kong plummeted by 93.6% to 3.57 million (2019: 55.91 million) while overnight visitors fell by 94.3% to 1.36 million (2019: 23.75 million). The drop in GDP further worsened from a decrease of 1.2% in 2019 to a decline of 6.1% in 2020. The local unemployment rate has also risen from 3.3% in 2019 to 6.6% in 2020.

* Underlying profit attributable to shareholders and underlying earnings per share excluded the post-tax effects of investment properties valuation movements.

Under the worldwide economic adversity, the Group's various businesses have faced implacable challenges. Hotel, food and beverage and travel businesses were severely affected by the plunge in the number of visitors to Hong Kong and the imposition of social distancing measures. In view of the economic downturn, the lease restructuring and rent concessions granted to tenants have also slightly affected the Group's property rental business performances and that in turn induced a downward valuation on the relevant investment properties. In responding to such a critical and unfavorable business surrounding, swift and flexible reactions to the market are crucial. On top of continuing to implement strict cost controls and postponed dispensable capital expenditures, the Group has strategically created new experiences and products that catered to the rehabilitated consumer behaviors, and at the same time adjusted operational tactics to respond to the intensive anti-epidemic regulations. The themed staycation packages targeting local market and the exquisite dining and festive takeaway offers have proven to be well accepted and commended.

Outlook

There is no deny that Hong Kong as well as the global economic has continued to be seized with drawbacks caused by the aggravation of COVID-19 throughout the world. Coupled with the influence of geopolitics and Sino-US frictions, Hong Kong is further facing the gravest situation from deteriorated business environment to shortcoming local sentiments. Yet, the Group with its entrenched substances and affluent know-how would expeditiously gratify the new normal under the epidemic. Concomitantly, my team and I would strive to prepare and commit for the upcoming challenges and destabilizing factors with prudence, determination and optimism. I trust Hong Kong will recuperate gradually with the epidemic being under control and I will continue to lead the Group pragmatically to uplift service quality and operational efficiency in preparing to seize on any potential opportunities and mark a new beginning under the new normal.

Acknowledgement

I would like to take this opportunity to thank the Board of Directors for their support and guidance to the Group. On behalf of all the shareholders and the Board of Directors, I would like to express my sincere gratitude to the management team and employees for their persevering contributions to the Group.

Lee Ka Shing Chairman and CEO

Hong Kong, 18 March 2021

MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS OVERVIEW

Hotels and Serviced Apartments Business

The global tourism and hospitality industries have been almost completely shutdown with no signs of full relaxation of worldwide travel control measures. With the sharp drop of number of visitors to Hong Kong, local tourism and hotel industries were among the hardest hit and related industries were facing tremendous pressures. In 2020, overall visitors and overnight visitors to Hong Kong fell by 93.6% and 94.3% to 3.57 million and 1.36 million respectively; amongst them, mainland tourists were 2.71 million and 0.88 million respectively. The hotel and serviced apartments business recorded revenue of HK$202 million, down by 63.9% from last year. The earnings before interest, taxes, depreciation and amortization (''EBITDA'') was a loss of HK$5.3 million.

To cope with stringent cross-border travel restrictions, the Group flexibly adjusted our business strategies and created unprecedented experiences with new services. Various popular themed staycation packages have been launched in response to the shifted local consumption patterns, including ''Escape Room'' and ''The Mira-cle of Mermaid Dance Staycation'', along with innovative technological elements, such as virtual reality gaming experience, in order to enhance and diversify customer experiences, and thereby incurring occupancy rates and revenue. In addition, Mira Moon Hotel was arranged as a quarantine hotel to act in concert with the government's anti-epidemic and quarantine measures, and respond to the different needs of travelers. The Group has also strengthened cost control and temporarily suspended recruitment to get well prepared for the journey ahead.

Property Rental Business

Hong Kong's retail industry has suffered successive shocks by the epidemic, and the rents of shops and commercial buildings in core shopping districts have continued to drop with ascending vacancy rate, further to the exits of international brands in Hong Kong, the reduction of business scale and branches by local chain retailers, and the closure of small and medium enterprises. Overall leasing activities have slowed down as a result. Relief measures including lease restructuring and rent concessions were offered to individual tenants to withstand the vicissitude. The revenue of our property rental business thus contracted slightly to HK$819 million with EBITDA at HK$713 million, which were down 10.3% and 10.7% respectively compared with last year.

The Group proactively launched various marketing activities and promotions to drive footfall to the mall and boost tenants' sales revenue, such as coupon rebates campaign ''DINE & EARN - Reward Your Way!'' and ''MIRA Grab & Go'' takeaway offers. Besides, the Group has continued to instill dynamism and a sense of freshness into the mall through optimizing tenant mix and introducing new brands including Gyu-Kaku Buffet, Donguri Republic, etc. We also made an all-out effort to improve various facilities including the repartitioning of retail space, refinement of arcade layout, and upgrade

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